Dutch e-commerce growth flattens in May (but still +48%), as concerns about the financial situation in society hold consumers back

Deze post is ook te lezen in het Nederlands.

AfterPay Insights research among more than 5,500 consumers in the Netherlands since the corona outbreak reveals that e-commerce purchases are up +48% compared to Dutch consumers’ normal online shopping behavior, so preceding the corona outbreak. Although Dutch e-commerce is still increasing, growth has reached a ‘plateau’ in the second half of May.

We see two different but clear trends explaining consumers online purchase behavior in general, and demands on merchants specifically. First, the increasing concerns around the financial uncertainty in society have increased in importance for Dutch consumers, and are a barrier to purchase more online. Transferred to demands on merchants, this means that aspects such as trust and security have become even more important.

Second, Dutch shoppers have become more mature in their purchasing pattern. Over the past months, they have learned that making purchases online is more convenient; consumers have started to make online purchases in categories where they previously made them offline. Therefore, we continue to see that online shoppers are expanding their repertoire by venturing into new categories online. This is especially evident in Fashion where 18% of the online shoppers made at least one purchase in the second half of March, and 28% have done so in the second half of May. This partly explains the growth of Fashion with +54% in number of purchases since the corona outbreak.

The increase of online purchases is largely driven by existing online shoppers buying more. Heavy shoppers have increased e-commerce purchases and the share of the ‘no purchase’ segment has increased. This means that consumers who previously shopped offline, have started to shift purchases to online channels. Important to note here is that our research reveals that only more frequent online shoppers are prone to shifting purchases from brick and mortar stores to online in certain categories - this is especially noticeable in the food categories.

Heavy shoppers make up 15% of all Dutch online shoppers but they account for 50% of all online purchases in The Netherlands. In order to attract and retain heavy shoppers’, merchants need to focus on a fast and reliable delivery. This includes both managing these shoppers decreasing satisfaction with speed of delivery as well as helping them overcome their worry about the risk of getting contaminated by packages ordered.

E-commerce growth in The Netherlands reaches a plateau in May

Compared to before the corona outbreak, e-commerce purchases in the Netherlands have grown continuously. However, in the first half of May the number of online purchases reached a ‘plateau’ and is by the second half of May up a total of +48% compared to consumers’ number of purchases before the corona outbreak.

Dividing the Dutch e-commerce shoppers into groups by online purchase frequency reveals some interesting insights. First of all we can see that the share of heavy shoppers (having made 5 or more online purchases during the last two weeks) has more than doubled, from 7% of the online shopper base prior to the corona outbreak to 15% by the second half of May. From a merchant perspective, heavy shoppers are a relatively small but critical segment, as they only represent 15% of Dutch online shoppers by the last weeks of May but they stand for 50% of all online purchases.

And at the other end of the spectrum, the share of infrequent online shoppers (having not made any purchases during the last two weeks) has decreased over time, from 36% of all online shoppers prior corona to 26% at the end of May, i.e. they have also started making more online purchases.

The merchant critical heavy shopper segment is dramatically over-represented among people aged 18-44, holding a full-time job with a mid to high income. The segment comprises more women and a quarter of the segment consists of women aged 18-34. The majority of heavy shoppers (50%) have kids living at home and a quarter live in urban areas. As heavy shoppers have increased from 7% of online shoppers preceding the corona outbreak to 15% in the second half of May, there has also been a shift in the demographic composition of this segment. Most notably, the inflow to this segment are women in both the pre-family and middle-aged-no-kids life stages. As a result, the earlier over-representation of high-income earners among heavy shoppers has slightly diminished.

The medium shopper segment (as defined by having made 2-4 online purchases in the last 2 weeks) has been stable over time in terms of number of consumers. This segment has a prominent middle age profile where the majority are aged 25-54. Almost a third are women aged 35-64, many with kids living at home. Overall, the segment comprises more women than men. The demographic profile of this segment since the corona outbreak has shifted slightly towards more younger women in the family life-stage.

The light shopper segment and the no purchases segment are over-represented among older consumers (aged 55+) without kids living at home. Their disposable income is also lower compared to the other shopper types. The average age of consumers in the segment has shifted over time to become even higher.

Why are Dutch consumers changing their e-commerce behavior?

The number one driver for Dutch consumers to increase e-commerce purchases is still to avoid meeting other people in physical stores, i.e. to prevent themselves from getting COVID-19.

Among the reasons related to being locked down at home, the convenience of online shopping is the largest driver to shop more online. The share of consumers who motivate increased online shopping by ‘cannot leave home due to taking care of family’ has decreased significantly, from 20% in the second half of March to 9% at the end of May.

The share of consumers motivating increased online purchases with ‘stores and restaurants being closed’ has seen a recent decrease, from 36% in the first half of May to 28% at the end of May.

Deep diving into the purchase frequency segments, 67% of heavy shoppers claim the reason for shopping more online is to avoid meeting people in physical stores – and this share has increased over time. Convenience is still the second most important driver for this segment, but it has decreased somewhat in importance recently. The pattern regarding the other drivers are quite similar between heavy shoppers and the other online shoppers.

At the beginning of the corona outbreak, the most common motivation for Dutch consumers to decrease online purchases was due to the financial uncertainty in society. During April, this barrier decreased in importance at the same time as the limited personal financial situation motivation increased in importance. And during May these motivations have swung back, so the societal financial worry is now again a larger driver for decreasing online purchases compared to the personal financial situation.

The concern that packages might carry virus has also decreased continuously. On the other hand, a driver for decreased online shopping that has become significantly more important is that consumers want to support local physical stores.

As the inherent trait of a heavy shoppers is to shop more online, consumers in this segment also need to encounter heavier barriers in order to make a conscious decision not to shop online.

Heavy shoppers are significantly more concerned about getting contaminated by the virus and about possible delays in delivery, compared to online consumers who make less purchases. And since the second half of March, we also see a significant increase in the share of heavy shoppers who motivate decreased purchases with their worry about the financial uncertainty in society.

How have Dutch consumers’ worries developed since the corona outbreak and what is the impact on e-commerce?

The general level of worry among Dutch online shoppers has decreased since the start of the corona outbreak. Worries about personal health have decreased the most, from 53% at the second half of March to 38% by the second half of May. In that same period, worries about the personal financial situation decreased from 36% to 31%.

Without a doubt, the level of worry about the corona outbreak has a powerful impact on consumers’ e-commerce behavior.

A general conclusion is that the more worried a consumer is about corona from a health- as well as financial perspective, the more online purchases a consumer does. Heavy shoppers are the most worried, followed by Medium shoppers and Light shoppers. During the past month, the personal health worry has decreased among all shopper types. And the financial worry has not decreased among heavy shoppers but it has among mid- and light shoppers.

For a deep dive on worries and the impact on e-commerce purchases, look into our earlier blog about how worries about health and finances have impacted consumers’ online behavior.

How have Dutch consumers’ purchases in product categories developed since the corona outbreak?

Directly following the corona outbreak, Fashion and Cosmetics/Beauty were negatively affected in the Netherlands as both showed a decrease in online purchases. But both categories have since bounced back and are, compared to the number of purchases before the corona outbreak, now up 54% and 35% respectively. The other categories in the chart below have grown continuously since the corona outbreak.

What is also notable is that all these categories that had a strong increase in number of purchases during the first two months of the corona outbreak have now decreased in growth in the second half of May.

Other categories in the Netherlands displayed a growth directly following the corona outbreak, and remained basically stable during the first two months of the corona outbreak . Notable here is that many of these categories show growth during the second half of May.

There are also some categories that increased following the corona outbreak, and showed a decline in purchases during the first two months of the outbreak. As seen among the ‘stable’ categories above, many of these categories have also shown a growth during the second half of May.

Deep-diving into shopping frequency, analytics reveal that consumers’ share of online purchases made within the categories of ‘Food and groceries’ as well as ‘Take away food’ is correlated to online purchase frequency. The conclusion here is that you have to be a quite frequent online shopper (heavy shopper) in order for you to shift your food purchases from offline channels to online.

Will Dutch consumers shop more or less in June?

It is not unlikely that the number of online purchases in the Netherlands will grow in June, but with a dampened rate. We draw this conclusion based on the closing of the gap between the share of consumers claiming they will increase online purchases and the share saying they will decrease purchases.

As might be expected, heavy shoppers are more positive towards increasing their number of online purchases in the coming month compared to the other shopper segments. But in line with the overall results, the share claiming they will buy at the same level as today is also increasing among heavy shoppers – and this pattern is consistent across all shopper types.

Which products will Dutch consumers buy more or less in June?

For most categories, the rate of recent growth is in line with the expected future growth. But there are some exceptions. Gardening tools and Hardware/Building materials has shown a significant increase, but the future outlook is pointing towards a dampened rate of growth.

As described above, the main reason for the 48% total increase in e-commerce purchases in the Netherlands is that current e-commerce consumers have started buying more – as opposed to the increase being driven by offline consumers switching to online purchasing.

But we also see that online shoppers are expanding their repertoire by venturing into new categories online. This is especially evident in Fashion where 28% of the online shoppers made at least one purchase in the second half of May, and 18% had done so in the second half of March.

Dutch consumers indicate even higher demands of merchants

Currently, the most important reason for Dutch consumers to choose a webshop is if they have purchased there before. That the webshop is perceived as secure is the second most important aspect, which is also connected to having a previous experience with the webshop.

Consumers also think lowest price is important, but it is a distant third compared to the other two reasons for choosing a specific webshop, and this aspect is considerably less important in the Netherlands compared to in the other countries included in these analyses.

We see a very clear link between the number of online purchases made and the amount of demands put on merchants. The ranking of the demands is similar across the different segments based on online purchase frequency, with some interesting differences.

The last point is especially interesting as heavy shoppers - for the most part - are experienced online shoppers. But how do heavy shoppers define the concept of ‘security’? Learn more in our detailed deep dive into the subject.

Analyzing the share of consumers who state if needs have become less or more important, the overall conclusion is that all demands of merchants have become more important. Compared to before the corona outbreak, the needs that have increased the most in importance are ‘well-known webshop’ followed by ‘having used the webshop before’, ‘webshop I perceive as secure’ and the webshop having a ‘wide range of products’.

Looking into the demands placed on merchants in combination with shopping frequency, heavy online shoppers in The Netherlands have significantly higher demands related to webshops having a wide range of products, displaying in-stock information as well as having both a reliable and fast delivery.

How are Dutch consumers’ changing demands affecting merchant performance?

Consumers are most satisfied with online merchants’ performance regarding shipping and delivery, the payment process as well as website security. The lowest degree of consumer satisfaction is measured for customer service and the return process. But the aspect that has decreased the most since the corona outbreak is consumers’ satisfaction with fast delivery time; this drop is mainly driven by the medium- and heavy shopper segments.

Interestingly, the overall level of satisfaction with merchants’ performance does not differ significantly between light shoppers, medium shoppers and heavy shoppers. However, the satisfaction does differ per area.

Light shoppers are relatively more satisfied with products in stock, low price and fast delivery. But they are, on the other hand, less satisfied with the wide range of products.

Merchant considerations:

Medium shoppers’ level of satisfaction across all areas is more or less in line with the average across all online shoppers, but security and good customer service stand out as key needs. Once these needs are met, the likelihood that a medium shopper transitions to a heavy shopper increases. This relates to the fact that these shoppers have a more offline mindset and prefer a tangible, face-to-face experience. 

Merchant considerations:

Heavy shoppers are more satisfied with merchants’ wide range of products and the return process. And they are considerably less satisfied with products in stock, low prices and fast delivery time.

Merchant considerations:

What is next?

For our next post we will be analyzing the biggest category in e-commerce: Fashion. How has this category developed during the corona outbreak? What are consumers’ drivers, needs and how satisfied are they with the performance of online Fashion merchants? Stay with us to find out.